Bank of Japan ready for more bold action

I am City A.M's deputy editor, having joined the newsroom in late 2010 as an economics reporter.

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Julian Harris

JAPAN could be set for even more monetary stimulus, its central bank’s deputy governor revealed yesterday, less than a week after it announced the latest tranche of quantitative easing (QE).

The country’s asset buying and loan programme will be boosted to 80 trillion yen (£632bn), the Bank of Japan (BoJ) said last Wednesday. And yesterday its deputy governor said that more could follow.

“As has been the case up till now, we’ll take bold and flexible action when necessary, while scrutinising the outlook for the economy and prices as well as risks,” Hirohide Yamaguchi said.

“We’ve judged that the economy was undershooting our expectations. If so, there was no reason to delay taking policy action," he pledged.

Yamaguchi added that the slowdown in Chinese growth, combined with ongoing strife in the Eurozone, would delay Japan’s recovery by around six months. Japanese exports last month were down 5.8 per cent compared to a year earlier, official data has estimated.

“The slowdown in Chinese growth is lasting longer than expected. It’s certain that the timing of [China’s] exit from the slowdown will be delayed,” he said.

Japan’s economy bounced back from 2011’s horrific earthquake and tsunami, which devastated many coastal regions, yet has begun to stall in recent months as weak global demand drags on growth.

Despite worries over the country’s trading figures, Yamaguchi stressed that the authorities are not permitted to directly intervene with Japan’s currency.

“But that does not mean we do not care anything about currency moves,” he added, saying that moves in the value of the yen are considered when the BoJ is weighing up policy moves to boost the economy.